Home builder stocks have had a strong rally, but some chart-watchers say a short-term warning light has started flashing.

The SPDR S&P Homebuilders exchange-traded fund (XHB) rallied 1% to $32.23 in afternoon trading Friday on volume of 2.4 million shares, and was on track to post the highest weekly close since June 2007. The ETF is up 21% so far in 2013.

But Steve Nison, founder and president of Candlecharts.com, said the appearance of a “bearish engulfing” reversal pattern Thursday–the XHB opened at a new high but closed below the previous session’s low–makes him “cautious” for the short term, especially since it was formed “on relatively high volume.”

Watch that “bearish engulfing” pattern

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On Thursday, volume of 6.8 million shares topped the 30-day average of 5.2 million.

He said the negative short-term signal for the XHB will remain in place until the “bearish engulfing” is wiped out with a close above $32.60.

In a broader context, however, Mr. Nison doesn’t expect any weakness to extend too far, or last very long. He expects strong support within the price gap in charts between the May 2 intraday high of $30.55 and the May 3 low of $30.78. “The long-term trend is up,” Mr. Nison said. “Any pullback should be contained by that gap.”

Stone & McCarthy Research chief technical analyst Michael Sacchitello agrees. “Short term, [the XHB] may be vulnerable to a pullback,” he said. “But I see no sign of a major trend turn at this point.”

If the support at the early May price gap were to break, Mr. Sacchitello expects support on the weekly charts at the April low at $27.88.

If the bearish engulfing pattern is canceled out with a close above $32.60, his initial upside target for the XHB is $37.50.